COMPANY NEW STARTUPS DECLINING FOR DECADES

With a few zigs and zags, the WSJ shows the number of new startups per year has been decling since, at least, 1977 or 39 yrs though it looks to be pretty flat since 2010 (see figure).*  Also during this period, the number of employees in new startups has declined from nearly 6% of the workforce to 2.1% today (see figure).  As the WSJ says, this is very disturbing.

Examination of the figure shows a drop in the number of new startups and employees was pretty flatduring the 1990s; however a steep delcine occurred from about about 2006 to 2009.  Curiosly, this decline started well before the Great Recession.

Economists are concerned that the slowing rate of startups signals the economy is growing less competitive, with the largest firms controlling more market share than they did in earlier periods. The White House’s Council of Economic Advisers has argued this leads to outsize returns for certain companies, and has dampened wages for workers, widening inequality.
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Other figures from Wednesday’s Business Employment Dynamics report pointed in the same direction. The number of “establishment births,” or new businesses, fell by 26,000 to 220,000 in the first quarter of 2016. The number of jobs those establishments accounted for also dropped by 161,000 from the previous quarter to 734,000, the lowest level since 2011. The net employment change in the first quarter was a gain of 194,000 jobs, the lowest figure since the first quarter of 2010.*

(Click on figure to enlarge)

* http://blogs.wsj.com/economics/2016/11/09/job-gains-at-startups-are-way-down-and-thats-a-bad-sign/?mod=djemRTE_h